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POPPIN KETTLE (Collectively "Respondents")
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ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-14-886-B |
I. PRELIMINARY STATEMENT
| 1. | The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672c of the General Statutes of Connecticut, the Connecticut Business Opportunity Investment Act (“Act”). |
| 2. | Pursuant to Section 36b-71(a) of the Act, the Commissioner, through the Securities and Business Investments Division of the Department of Banking, has conducted an investigation into the activities of Respondents to determine if Respondents have violated, are violating or are about to violate provisions of the Act (“Investigation”). |
| 3. |
As a result of the Investigation, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act. |
| 4. | As a result of the Investigation, the Commissioner has the authority to issue a cease and desist order against Respondents pursuant to Section 36b-72(a) of the Act. |
| 5. |
As a result of the Investigation, the Commissioner has the authority to impose a fine upon Respondents pursuant to Section 36b-72(b) of the Act. |
II. RESPONDENTS
| 6. | Poppin Kettle Franchising, Inc. (“Poppin Kettle”) is a Massachusetts corporation formed on July 13, 2012. Poppin Kettle maintains its principal place of business at 8 Faneuil Hall Marketplace, Third Floor, Boston, Massachusetts 02109. |
| 7. | Yofresh Yogurts Franchising, Inc. (“Yofresh”) is a Massachusetts corporation formed on January 28, 2011. Yofresh maintains its principal place of business at 8 Faneuil Hall Marketplace, Boston, Massachusetts 02109. |
| 8. |
Chris T. Gregoris a/k/a Christos T. Gregoris a/k/a Christopher Gregoris (“Gregoris”) is an individual whose last addresses known to the Commissioner are 6 Acton Street, Watertown, Massachusetts 02472 and 8 Faneuil Hall Marketplace, Third Floor, Boston, Massachusetts 02109. Gregoris is the President, Treasurer, Secretary and sole Director of Poppin Kettle, as well as the President, Treasurer, Secretary and sole Director of Yofresh. |
| 9. | Gregoris was the President, Treasurer, Secretary and sole Director of Java’s Brewin Development, Inc. (“Java’s Brewin”), a Massachusetts corporation that was dissolved on June 18, 2012. On June 23, 2008, the Commissioner entered a Cease and Desist Order against Java’s Brewin for offering and selling unregistered business opportunities in violation of the Act, and on October 8, 2008, the Commissioner fined Java’s Brewin $30,000 in connection with the same violation. (Docket No. CF 2008-845-B). To date, such fine remains unpaid. |
| 10. | As entities having the same sole officer and director, Poppin Kettle, Yofresh and Java’s Brewin are affiliates within the meaning of Section 36b-61(1) of the Act. |
III. STATEMENT OF FACTS
Poppin Kettle
| 11. | Poppin Kettle is in the business of offering and selling products, equipment and services to enable purchaser-investors to establish their own gourmet popcorn business. Poppin Kettle purchaser-investors may purchase a store, kiosk, cart or combination thereof. |
| 12. | Since approximately September 2011, Poppin Kettle has maintained a website that states Poppin Kettle “offers franchise opportunities nationwide.” The domain name (poppinkettle.com) is registered in Gregoris’ name. On its website, Poppin Kettle offers franchises for a $19,500 fee and elicits indications of interest from prospective purchaser-investors. |
| 13. | Since approximately September 2011, Respondents Poppin Kettle and Gregoris offered and/or sold Poppin Kettle business opportunities to at least one purchaser-investor in Connecticut, including an individual (“Investor 1”) who paid Poppin Kettle $19,500 in May 2013 as an initial franchise fee. As of May 2014, there is one Poppin Kettle Connecticut franchise location, which belongs to Investor I and is located in Meriden, Connecticut. |
| 14. | Gregoris represented to the Commissioner in writing that on May 22, 2013, Poppin Kettle sold a Poppin Kettle business opportunity to Investor 1, who paid Poppin Kettle $19,500 as an initial franchise fee. |
| 15. | On its website, Poppin Kettle represents to purchaser-investors that it will provide, among other things, pre-opening and operations training and support and that it will assist the purchaser in locating sites for the operation of the franchised business. |
| 16. | At no time was the Poppin Kettle franchise registered as a business opportunity under the Act, nor did Poppin Kettle file a claim with the Commissioner that its business opportunity was excluded from the definition of “business opportunity” or exempt from registration under the Act. |
| 17. | The Internet offering of Poppin Kettle franchises did not qualify for exemptive treatment pursuant to the Commissioner’s November 20, 1996, Order Exempting Certain Offers of Business Opportunities Made on the Internet from Business Opportunity Registration (“Internet Offering Exemption”) since Poppin Kettle’s website did not state that the business opportunity was not being offered to Connecticut residents and since subsequent sales were not made at a time when the business opportunity was registered. |
| 18. | Prior to the sale of the Poppin Kettle franchise to Investor 1, Respondents Poppin Kettle and Gregoris failed to provide Investor 1 with the disclosure statement containing the disclosures required by Section 36b-63 of the Act. Such disclosures, included without limitation, key information on the franchise, the seller and its principals and affiliates, risks associated with the purchase of the business opportunity; financial information on the seller; and relevant employment, disciplinary and litigation histories of the seller and its principals. Respondents Poppin Kettle and Gregoris, for example, failed to disclose to Investor 1 that it settled civil litigation brought by several New York business opportunity purchasers naming Gregoris and Java’s Brewin as defendants (DiPietro et al. v. Java’s Brewin Development, Inc., Christopher T. Gregoris et al. (E.D.N.Y. 1:08-cv-01620-ENV-MDG 2008)). In addition, Respondents Poppin Kettle and Gregoris failed to disclose to Investor 1, among other things, that Gregoris was a control person of Java’s Brewing, which was the subject of a Cease and Desist Order entered by the Commissioner on June 23, 2008 for violations of the Act; that on October 8, 2008, the Commissioner imposed a $30,000 fine against Java’s Brewing for the same violations of the Act, and that such fine remains unpaid. |
| 19. | Prior to the sale of the Poppin Kettle franchise to Investor 1, Respondents Poppin Kettle and Gregoris failed to inform Investor 1 that the Poppin Kettle franchise was not registered under the Act. |
Yofresh
| 20. | Yofresh is in the business of offering and selling products, equipment and services to enable purchaser-investors to establish their own frozen yogurt business. |
| 21. | Since at least September 2013, Yofresh has maintained a website stating that it: offered franchises for $29,500; would assist purchasers in securing a location with the use of a nationwide network of brokers; and would provide both pre-opening and operations training. The domain name (yofreshyogurtcafe.com) has been registered in Gregoris’ name since January 2010. |
| 22. | At no time was the Yofresh franchise registered as a business opportunity under the Act, nor did Yofresh file a claim with the Commissioner that its business opportunity was excluded from the definition of “business opportunity” or exempt from registration under the Act. |
| 23. | The Internet offering of Yofresh franchises did not qualify for exemptive treatment under the Internet Offering Exemption because Yofresh’s website did not state that the business opportunity was not being offered to Connecticut residents. |
| 24. | Gregoris represented to the Commissioner in writing that no sales of the Yofresh franchise had been made to Connecticut residents. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
AND ORDER IMPOSING FINE
a. The Poppin Kettle Franchise Offered and Sold by Respondents
Poppin Kettle and Gregoris is a Business Opportunity
| 25. | Paragraphs 1 through 24, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
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26.
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The products, equipment, supplies, and services described in paragraphs 11 and 12 constitute a “business opportunity” within the meaning of Section 36b-61(2) of the Act in that they were offered and/or sold to purchaser-investors by Respondents Poppin Kettle and Gregoris to enable those purchaser-investors to start a gourmet popcorn business. |
| 27. | As described in paragraph 15, Respondents Poppin Kettle and Gregoris represented to prospective purchaser-investors that Respondents Poppin Kettle and Gregoris would assist purchaser-investors in locating sites for the operation of the franchise business and provide purchaser-investors with training and support necessary to make the franchise business a success. In so doing, Respondents Poppin Kettle and Gregoris represented that they would provide purchaser-investors with a sales program or a marketing program within the meaning of Section 36b-61(2)(D) of the Act. |
b. The Yofresh Franchise Offered by Respondents
Yofresh and Gregoris is a Business Opportunity
| 28. | Paragraphs 1 through 27, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 29. |
The products, equipment, supplies, and services described in paragraphs 20 and 21 constitute a “business opportunity” within the meaning of Section 36b-61(2) of the Act in that they were offered to purchaser-investors by Respondents Yofresh and Gregoris to enable those purchaser-investors to start a retail yogurt business. |
| 30. | As described in paragraph 21, Respondents Yofresh and Gregoris represented to prospective purchaser-investors that Respondents Yofresh and Gregoris would assist purchaser-investors in locating sites for the operation of the franchise business and would provide purchaser-investors with training and support necessary to make the franchise business a success. In so doing, Respondents Yofresh and Gregoris represented that they would provide purchaser-investors with a sales program or a marketing program within the meaning of Section 36b-61(2)(D) of the Act. |
c. Violation of Section 36b-67(1) of the Act by Respondents -
Offer or Sale of Unregistered Business Opportunities
| 31. | Paragraphs 1 through 30, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 32. |
Section 36b-67(1) of the Act provides, in pertinent part, that “[n]o person shall in connection with the sale or offer for sale of a business opportunity: (1) Sell or offer for sale a business opportunity in this state or from this state unless it has first been registered with the commissioner and declared effective by the commissioner in accordance with the provisions of section 36b-62.” |
| 33. | As more fully described in paragraphs 11 through 24, inclusive, Respondents offered and/or sold Poppin Kettle and Yofresh business opportunities absent registration under the Act. The offer and sale of such business opportunities absent registration constitutes a violation of Section 36b-67(1) of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-72(a) of the Act, and for the imposition of a fine upon Respondents under Section 36b-72(b) of the Act. |
d. Violation of Section 36b-67(6) of the Act
by Respondents Poppin Kettle and Gregoris –
Fraud in Connection with the Offer or Sale
of a Business Opportunity
| 34. | Paragraphs 1 through 33, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 35. |
The conduct of Respondents Poppin Kettle and Gregoris, as more fully described in paragraph 18, constitutes, in connection with the offer or sale of a business opportunity, directly or indirectly omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading. Such conduct constitutes a violation of Section 36b-67(6) of the Act, which forms a basis for an order to cease and desist to be issued against Respondents Poppin Kettle and Gregoris under Section 36b-72(a) of the Act, and the imposition of a fine upon Respondents Poppin Kettle and Gregoris under Section 36b-72(b) of the Act. |
V. ORDER TO CEASE AND DESIST, NOTICE OF INTENT TO FINE
AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Poppin Kettle has committed at least one violation of Section 36b-67(1) of the Act and at least one violation of Section 36b-67(6) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Gregoris has committed at least one violation of Section 36b-67(1) of the Act and at least one violation of Section 36b-67(6) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Yofresh has committed at least one violation of Section 36b-67(1) of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist and the imposition of a fine upon Respondents is necessary or appropriate in the public interest or for the protection of purchaser-investors and consistent with the purposes fairly intended by the policies and provisions of the Act;
WHEREAS, notice is hereby given to each Respondent that the Commissioner intends to impose a maximum fine not to exceed one hundred thousand dollars ($100,000) per violation upon each Respondent;
WHEREAS, the Commissioner ORDERS that POPPIN KETTLE FRANCHISING, INC. CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered business opportunities; and (2) in connection with the offer or sale of any business opportunity, directly or indirectly employing any device, scheme or artifice to defraud, making any untrue statements of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person;
WHEREAS, the Commissioner ORDERS that CHRIS T. GREGORIS a/k/a CHRISTOS T. GREGORIS a/k/a CHRISTOPHER GREGORIS CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered business opportunities; and (2) in connection with the offer or sale of any business opportunity, directly or indirectly employing any device, scheme or artifice to defraud, making any untrue statements of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person;
WHEREAS, the Commissioner ORDERS that YOFRESH YOGURTS FRANCHISING, INC. CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, offering and selling unregistered business opportunities;
THE COMMISSIONER FURTHER ORDERS THAT, pursuant Section 36b-72 of the Act, each Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the General Statutes of Connecticut and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on July 24, 2014 at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the General Statutes of Connecticut. At such hearing, each Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
This Order to Cease and Desist shall remain in effect and become permanent against any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner may order that the maximum fine be imposed upon any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ______/s/__________ | |
| this 12th day of June 2014. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 12th day of June 2014, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to: Poppin Kettle Franchising, Inc., 8 Faneuil Hall Marketplace, Third Floor, Boston, Massachusetts 02109, certified mail no. 7012 3050 0002 1692 6507; Chris T. Gregoris a/k/a Christos T. Gregoris a/k/a Christopher Gregoris at: 6 Acton Street, Watertown, Massachusetts 02472, certified mail no. 7012 3050 0002 1692 6514; and 8 Faneuil Hall Marketplace, Third Floor, Boston, Massachusetts 02109, certified mail no. 7012 3050 0002 1692 6521; and Yofresh Yogurts Franchising, Inc., 8 Faneuil Hall Marketplace, Third Floor, Boston, Massachusetts 02109, certified mail no. 7012 3050 0002 1692 6538.
| ____/s/______________ | |
| Helen Crane | |
| Administrative Assistant |